Huntington Drops 4.6% On 4Q Profit Miss

Huntington Bancshares shares fell 4.6% on Jan. 25 after its 4Q earnings missed Street estimates. The company’s 4Q revenues on an FTE (fully-taxable equivalent) basis also came in below analysts’ expectations.

Huntington Bancshares (HBAN) reported 4Q earnings of $0.27 per share, which declined 4% year-over-year and fell short of analysts’ estimates of $0.29 per share. Meanwhile, the company’s FTE revenues of $1.24 billion grew 7% year-over-year but missed the consensus estimates of $1.25 billion.

The bank’s net interest margin declined to 2.94% in the fourth quarter from 3.12% in the year-ago quarter, while provision for credit losses increased to $103 million in 4Q from $79 million in the year-ago period. However, average loans and leases increased 8%, while average core deposits increased 16% at the end of the fourth quarter. (See HBAN stock analysis on TipRanks)

Meanwhile, the company also announced a quarterly dividend of $0.15 a share, which will be paid on Apr. 1 to shareholders of record as of Mar. 18. The quarterly payouts translate into an annual dividend yield of about 4.3%.

As for 2021, the company expects sales to grow in the range of approximately 1% to 3%. The company anticipates average loans and leases to increase in the range of about 2% to 4%, with approximately 5% to 7% growth expected for average total deposits on an annual basis.

Following the results, Wedbush analyst Peter Winter maintained a Buy rating and a price target of $18 (30.1% upside potential) on the stock.

Winter said, “HBAN delivered positive operating leverage (POL) for the 8th consecutive year in 2020, an enviable track record. Given the revenue momentum we assumed HBAN would deliver POL in 2021 (ex-TCF [TCF Financial Corporation] acquisition).” He added, “Despite the improvement in credit trends, HBAN plans to be more prudent with releasing reserves until they see more economic certainty, before it undertakes more aggressive reserve releases.”

From the rest of the Street, the stock scores a cautiously optimistic outlook with the analyst consensus of a Moderate Buy based on 6 Buys and 6 Holds. The average analyst price target of $15.70 implies upside potential of about 13.4% to current levels. Shares remained flat over the past year.